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A revisit to electronic documents and signatures

A revisit to electronic documents and signatures

The COVID-19 lockdown has highlighted the challenges of getting everyone together for an old-fashioned, original “paper and ink” signing session. Electronic signatures can ease property transfer transactions – here’s when and how they are valid.

“To sign a document means to authenticate that which it stands for, or is intended to represent the name of the person who is to authenticate” (quoted in the case below)

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We all know that verbal agreements, although fully binding for most types of transactions, are a recipe for uncertainty and dispute. It’s not just a question of trust – even if no one is deliberately dishonest about what was agreed upon, misunderstandings are common. We have a natural tendency to hear and remember what we want to, and a properly-drawn written agreement avoids that.

So even when a written and signed document isn’t required it is always wise to insist on one. Note that the parties themselves can require a document to be in writing and signed. Or it could be required by law – the most common examples of the latter are property sale agreements, wills, suretyship agreements, ante-nuptial contracts, and credit agreements (there are other less common examples – when in doubt, seek professional advice).

Have you ever wondered: why do we sign documents? Especially legal contracts and/or undertakings. Probably for certainty and the confidence of truth that may be reflected by adding our signatures to the bottom of a document. Breaking it down, the need for certainty by signature probably relates to:

  • bringing about a form of positive identification of the person or individual binding him/herself;
  • symbolizing and reflecting that individual’s intent to be bound to the agreement and actions resulting therefrom;
  • having the bonus that the event/document is thus elevated in status by being “recorded”.

The signing ritual as we have come to know it is however not always easy to achieve. In addition, the COVID-19 lockdown, in particular, has highlighted the challenges of getting everyone together for an old-fashioned, original “paper and ink” signing session. Even when social distancing is no longer required and ceases to be the norm in society, the convenience and benefits of being able to sign documents remotely (whether you and the other party/ies are in different houses, cities, or even countries), are obvious.

Firstly, when is a digital agreement ‘in writing’?

Our law, in the form of the Electronic Communications and Transactions Act, of 2002 (the “ECT Act”) recognises the general validity of digital documents. Where our law requires that contracts must be in writing, the ECT Act recognises that a data message may meet the requirements for being “in writing” and that where the signature of a person is required by law and such law does not specify the type of signature, the requirement is met if an “advanced” electronic signature is used, which establishes a valid and binding agreement.

A “document or information” is “in writing” if it is:

  • “in the form of a data message; and
  • accessible in a manner usable for subsequent reference.”

As a result, perfectly valid and enforceable agreements are now often entered into online, by email, SMS, WhatsApp and the like.

Secondly, is a ‘signature’ always required?

Formal “signature” isn’t always essential as the ECT Act provides that if the parties to an electronic transaction don’t specifically require an electronic signature, “an expression of intent or other statement is not without legal force and effect merely on because:

  • it is in the form of a data message; or
  • it is not evidenced by an electronic signature but is evidenced by other means from which such person’s intent or another statement can be inferred.”
Thirdly, how can you sign a document electronically?

Where a “signature” is required by law, the ECT Act recognises the concept of “electronic signatures”, which is defined as:

  • “data attached to, incorporated in, or logically associated with other data, and
  • which is intended by the user to serve as a signature”.

An “electronic signature” can take many forms. Where it is required by the parties, but they haven’t agreed on a particular type of electronic signature to be used, it is valid if:

  • “a method is used to identify the person and to indicate the person’s approval of the information communicated; and
  • having regard to all the relevant circumstances at the time, the method was used, the method was as reliable, as was appropriate for the purposes for which the information was communicated.”

That definition will often be wide enough to include, amongst others:

  • a mere identifying name at the end of an email message,
  • the more formal corporate signature, incorporating the name, designation and often business logo at the bottom of an email,
  • signatures affixed by virtue of signature tablets (known as Wacom signature pads) as used by banks (and gyms) throughout SA,
  • scanned images of physical signatures,
  • signatures created by pdf applications and
  • signatures confirmed by merely checking a checkbox at the bottom of a website or page if so intended,
  • as well as various others.

Remember however that the parties can specify what formats are and aren’t allowed, plus our courts may well look at all the circumstances of a case and decide for example that an actual manuscript signature is required even when transmitted electronically (see for example the “R804k” judgment discussed below).

Exceptions to the acceptability of electronic signatures:

Electronic signatures as listed above, are mostly deemed valid except in cases where either the parties themselves require actual physical signatures or where a law specifically prescribes a physical (‘wet ink on paper’) signature.

Some of these exceptions to the acceptability of digital signatures are even specifically listed and provided for in the ECT Act:

  • an agreement for the sale of immovable property in terms of the Alienation of Land Act of 1981 (The Alienation of Land Act requires explicitly: the content must be contained in a deed of alienation signed by all the parties thereto or by their agents acting on their written authority, and thus any contract for the sale or purchase of immovable property is specifically excluded from being valid if entered into electronically);
  • an agreement for the long-term lease of immovable property in excess of 10 years as subsequently inferred to in terms of the Alienation of Land Act read together with the Deeds Registries Act of 1937 and the Formalities in respect of Leases of Land Act of 1969;
  • the execution, retention and presentation of a will or codicil as defined in the Wills Act of 1953;
  • the execution of a bill of exchange as defined in the Bills of Exchange Act of 1964.
“Advanced” electronic signatures

This is a concept of authentication designed to make an electronic signature more reliable and is used when a law requires a signature for specified documents or transactions but doesn’t specify a particular type of signature.

These types of signatures are “advanced” in the sense that it is to be accredited by a valid accreditation authority that presents a certificate confirming the identity of the individual so signing. Currently only two such entities, the SA Post Office as well as a private company called LAWTrust, are authorised entities to issue these validly in South Africa (as authorised under the requirements of the ECT Act).

It is suggested that an “advanced” electronic signature should:

  • identify the signatory;
  • in itself be identified as an advanced electronic signature;
  • detect any subsequent alterations or corruption of the signed data message in the document (an “audit trail”);
  • make use of a 3-factor signing mechanism (or equivalent) to ensure the highest reliability of the signature.

As an example, note that various municipalities are currently issuing electronic rates certificates using these “advanced” digital signatures.

In terms of the above, technically, signatories to affidavits and even the commissioning of documents should be legally acceptable, if done in an electronic format complying with the ECT Act.

Unfortunately, digital/electronic signatures as such have not yet been widely used, possibly due to various hurdles with a lot of governmental offices who lack understanding thereof. Another hurdle may also be the economic factor and perceived difficulty in obtaining “advanced” electronic signatures, and thus preventing widespread use thereof.

The challenge, therefore, remains to have these digital signatures accepted after adequate testing in our courts of law.

A further caveat:

Check before merely accepting the use of electronic signatures with Governmental offices such as the Deeds Office or the Master of the High Court’s Offices:

Even though the Master of the High Court did not accept electronic signatures on documents before Covid-19 lockdown, it has been argued that there should be no legal impediments on why one could not submit electronically to the Master’s Offices. Submitting electronically has indeed been allowed to a certain extent during the current conditions. Time will tell how this approach will be recognised and furthered after the lifting of lockdown.

In principle, where the Deeds Registries Act requires documents like the Power of Attorney to Transfer Property to be “signed”, that could technically be interpreted to be done either physically or electronically.

In October 2018, the first electronically signed signature of a Power of Attorney to Transfer Property was used and indeed registered in Bloemfontein. This use of an electronic signature has since been criticised widely, as it was subsequently confirmed that a binding and pre-existing Registrar’s Conference Resolution (Nr 50/2006) clearly prescribed that only originally signed documentation would be permissible for Deeds Office purposes, thus rendering future use of electronic signatures for use in Deeds Offices invalid until this Conference resolution is withdrawn or repealed.

The Electronic Deeds Registries Act (the “EDRS Act”) has however since been signed into effect on 19 September 2019, which should in due course enable property transactions to be processed electronically in its entirety. The Chief Registrar of Deeds has consequently been instructed to develop, establish and maintain such an electronic deeds registration system using information and communications technologies for the preparation, lodgement, registration, execution and storing of deeds and documents.

The purpose of the EDRS Act is intended to streamline property registrations in the Deeds Office. As such, it aims to enable electronic processing, preparation (which will effectively incorporate some form of ‘electronic signatures by conveyancers’) and lodgement of deeds and documents by conveyancers and the Registrar of Deeds.

And elsewhere?

Internationally, the approach seems to be somewhat similar to South Africa, with the ECT Act overlapping legislation in the US and European Union. There seem to be all sorts of conventions that govern these acts regarding international e-commerce.

In conclusion:

Even when not specifically required, a big advantage of “advanced” electronic signatures is that they are presumed to be valid. That means anyone attacking one would have to prove its invalidity and not the other way round.

They are also instantaneous and quick, especially when signatories are in different venues, where limited printing and scanning facilities are available, in circumstances such as Covid-19 lockdowns. Parties to agreements can, therefore, sign anywhere, anytime. It can provide enhanced customer experience, signifies technical modernity, with the bonus that documents can be rendered tamper-proof after signing thereof.

Under certain circumstances, electronic signatures can indeed be more secure than the old pen and ink method.

Signing legal documents electronically does however seem to detract from the “personal experience” and time will tell if it also detracts from the weight of the officiator’s conscience and binding intent, when executing its physical handwritten signature to a document, as opposed to signing in the form of an “advanced” electronic signature.

With acknowledgement to a lecture by George Findlay of Lexis Nexis and an article by LawDotNews.

End

About the author: Sonja Janse van Rensburg is an attorney, notary and conveyancer with Van Zyl Kruger Inc.

Crisna van der Bank • 074 434 1234 • crisna@remax-toti.co.za 

Max Brooks • PA • 061 099 1234 • max@remax-toti.co.za 

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